BBC News | UK POLITICS | Euro leaders bid for e-commerce boom

European Union leaders are gathering in Lisbon for the special summit which ministers say could prove to be a turning point in economic reform.

The summit, originally proposed by the UK and Spain, will focus on what Europe can learn from the USA in creating new businesses and jobs in the information age.

UK Prime Minister Tony Blair, who arrived in Portugal on Wednesday night, is preparing to argue for cheaper and wider internet access and a removal of barriers preventing both businesses and customers taking to e-commerce.

The governments are also expected to seek to set targets for internet-literacy in education and business.

Appeals from Mr Blair for more labour market flexibility have met with resistance with a recent European Commission report showing that the EU has been slow to promote innovation, cut red tape or change welfare systems to encourage work.

'Vital reform'

But speaking to the BBC ahead of the summit, Mr Blair said that all of the member states were behind the summit, a joint initiative with the Spanish government.

"There is very substantial reform going on already in Europe," Mr Blair said. "That is the agenda. It is vitally important that we get that reform in Europe."

However, the UK could face pressure from European partners and the commission over dropping its veto to proposals to begin harmonising some European taxes.

Some governments want to challenge the UK's persistent blocking of a deal on a euro-tax on savings and Mr Blair may also face further demands to agree more qualified majority voting on taxation and social policy.

Romano Prodi, president of the European Commission, said that EU-wide tax harmonisation remained one of his goals.

"It is a point of division," he told the BBC. "I hope that we will find a compromise, perhaps not today but in the long term.

"If we are part of a single market rules should be set on this type of issue but no more."

Austria seeks detente

While the summit will be focusing on economic and employment reform, the controversy over the far-right Freedom Party's role in Austria's coalition government may return to the agenda ahead of the formal EU summit in Portugal in June.

The Austrian Chancellor, Wolfgang Schuessel, wants a lifting diplomatic sanctions imposed by the other 14 EU countries, but has warned that it is extremely unlikely.

France and Belgium have considered boycotting the official summit photograph in protest against the composition of Austria's government.

A Downing Street spokesman has said that it is "almost inevitable" that Mr Blair raise BMW's controversial break-up of the UK's Rover car group with his German counterpart Gerhard Schroeder.


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